Tuesday, July 17, 2018
Politics

House, Senate have big differences to bridge on tax plans

WASHINGTON — Now that the House and the Senate have both released their tax bills, the hard part can begin: reconciling them.

For months, Republican leaders of the "Big Six" working group held weekly meetings so that the tax plans that they unveiled would be largely unified, making it possible for legislation to sail through Congress before the end of the year. But the House and Senate proposals diverge on important provisions that will be challenging for lawmakers to rectify in the coming weeks, in part because of competing political priorities facing lawmakers in each chamber.

Number of income tax brackets

Republicans originally wanted to collapse the tax brackets to three, from seven, in part to achieve their goal of simplifying the tax code so that people could file on a postcard. That proved difficult. The House plan went with four brackets: 12 percent, 25 percent, 35 percent and a top rate that stays at 39.6 percent for millionaires.

The Senate bill sticks with seven brackets of 10 percent, 12 percent, 22.5 percent, 25 percent, 32.5 percent and 35 percent but lowers the top rate to 38.5 percent for high-income individuals and couples.

State and local
tax deduction

Perhaps the thorniest issue thus far has been how to handle the state and local tax deduction, which allows people to deduct their state and local income, sales and property taxes. The House bill limits the deduction to just property taxes and caps it at $10,000.

The Senate plan eliminates the SALT deduction entirely, a move that could cause backlash from many upper-middle-class families and spook House members who have already objected to the more generous scaled-back version in their chamber.

Small-business treatment

Republicans are united in their desire to give small businesses a tax break, but their plans differ in how to provide a tax cut. House lawmakers created a new 25 percent tax for "pass-through" businesses — sole proprietorships, partnerships and S corporations that currently pay taxes at the individual rate of their owners. However, they erected guardrails to prevent the new rate from becoming a loophole that wealthy individuals can exploit by converting themselves into entities and flowing their income through at the rate of 25 percent.

The Senate takes a different approach, creating a new deduction for pass-through businesses along with other incentives to promote investment.

Mortgage interest deduction

Republicans in the House would cap the deduction for mortgage interest debt at $500,000, down from the current cap of $1 million.

Senate Republicans have decided to leave the deduction alone. If that holds, it would be a big victory for real estate lobbyists, who have been vocal in their opposition to changing the deduction, but that could make the House bill even more expensive.

Making the tax code more ‘America First’

A main priority of the Republican tax effort has been making the United States’ tax system more competitive so that companies invest here and do not have an incentive to shift profits to lower-tax jurisdictions. The Senate plan will impose taxes on U.S. and foreign companies that shift offshore money earned in the United States. There would be an effective minimum tax on money earned domestically and a 12.5 percent tax on foreign revenue from intellectual property.

The original House approach would have levied a 20 percent "excise tax" on payments between U.S. and foreign companies that are affiliated with each other. This idea set off substantial confusion and opposition from drug and insurance lobbyists and was tweaked during the Ways and Means Committee’s amendment process.

Cutting the corporate tax rate

Reducing the corporate tax rate to 20 percent, from 35 percent, is at the center of both the House and the Senate tax plans. How soon they get there is the only difference. The House bill immediately cuts the corporate tax rate, fulfilling the wishes of President Donald Trump.

The Senate imposes a one-year delay on lowering the rate, a move that allows Senate Republicans to preserve other deductions that the House eliminates. Economists have debated the effect that the delay will have on economic growth.

Adoption, education, health

To cut business and individual tax rates and double the standard deduction for individuals and families, Republicans had to do away with many popular tax credits and other prized deductions. The House initially eliminated a tax credit for adoptions but later restored it. It also repeals deductions for medical expenses and counts tuition waivers that are widely used by graduate students as taxable income.

In the Senate, Republicans also preserve the adoption tax credit. Unlike the House, they maintain the deduction for medical expenses and provide "education relief" for graduate students.

To repeal, or not to repeal, the estate tax

Almost all Republicans agree philosophically that the estate tax — or death tax as they call it — is unfair. But repealing it is costly, and the tax tends to hit only the very wealthy (and their heirs). House Republicans decided in their bill to double the amount of inherited wealth that is exempt from the tax to $11 million, from $5.5 million, and phase out the tax after six years.

In the Senate, the exemption is also doubled, but the tax never dies.

Comments
Romano: Excuse me Gov. Scott, but you’re a hypocrite

Romano: Excuse me Gov. Scott, but you’re a hypocrite

Hypocrisy, thy name is Rick Scott.And, yes, I owe Shakespeare an apology.But I think Florida’s governor owes all of us an apology.This isn’t about one man’s opinion, and it isn’t about philosophical differences. This is about a politician who is publ...
Published: 07/17/18
Trump questions US intel, not Putin, on Russia 2016 meddling

Trump questions US intel, not Putin, on Russia 2016 meddling

HELSINKI — Standing next to Russia’s Vladimir Putin, President Donald Trump openly questioned his own intelligence agencies’ conclusions that Moscow was to blame for meddling in the 2016 U.S. election to Trump’s benefit and seemed to accept Putin’s i...
Published: 07/16/18

Pasco Political Notebook

Hunter, Murphy speak to Democratic ClubThe Trinity Democratic Club will host candidates Chris Hunter (running for U.S. Congress in District 12) and Amanda Murphy (running for state Senate in District 16) as guest speakers at its meeting at 6:30 p.m. ...
Published: 07/16/18
Giant pork pile awaits Americans as trade wars risk exports

Giant pork pile awaits Americans as trade wars risk exports

Donald Trump’s trade wars are making pork a bargain.American production is poised to reach an all-time high this year, and output is forecast to surge again in 2019. The supply boom comes as tariffs from China and Mexico threaten to curb export deman...
Published: 07/16/18
Sacha Baron Cohen still knows how to punk America, but his new show erodes what little trust we have left

Sacha Baron Cohen still knows how to punk America, but his new show erodes what little trust we have left

Sacha Baron Cohen’s return to incognito trickery is, in current conditions, a little like pouring rubbing alcohol into the nation’s open wounds.Employing the same ingenious commitment and subterfuge that made him famous in the guise of Ali G., Borat ...
Published: 07/15/18
Trump tweets, hits links before high-stakes Putin meeting

Trump tweets, hits links before high-stakes Putin meeting

TURNBERRY, Scotland — Two days before a high-stakes summit with Russian President Vladimir Putin, President Donald Trump played golf and tweeted Saturday from one of his namesake resorts, blaming his predecessor for Russian election meddling and lash...
Published: 07/14/18
March column: Transit petition has

March column: Transit petition has "steep hill"

Leaders of an effort to put a Hillsborough County transportation sales tax referendum on the November ballot say they’re confident they’ll gather enough petition signatures in time.But they may have to work fast. As of Thursday, All for Transportatio...
Published: 07/13/18
Updated: 07/15/18
Scott taps former Pinellas GOP chair to fill commission vacancy left by late John Morroni

Scott taps former Pinellas GOP chair to fill commission vacancy left by late John Morroni

Gov. Rick Scott appointed real estate investor and former Redington Shores Mayor Jay Beyrouti to the Pinellas County Commission on Friday, filling the vacancy created when Commissioner John Morroni died of cancer in May.In a short news release, the G...
Published: 07/13/18
His Ph.D is from a diploma mill. But candidate stands by his work

His Ph.D is from a diploma mill. But candidate stands by his work

The three letters were displayed prominently on George Buck’s campaign website, right after his name: Ph.D. Check his campaign finance records and those, too, display his doctorate. There’s no question that Buck, a Republican primary ca...
Published: 07/13/18

Fiat workers call for strike after owner buys Cristiano Ronaldo

Fiat factory workers in Italy can think of a few things they’d rather see their owner spend $130 million on than Cristiano Ronaldo.A Fiat Chrysler Automobiles union in the south of the country called for a strike to protest the purchase of star playe...
Published: 07/12/18